Blackfriar: It’s not sexy but CIT is the jewel in the crown for Carclo

Williamson stood for re-election last year – when he was supposed to give up the reins – in order to oversee the commercialisation of Carclo’s jewel in the crown Conductive Inkjet Technology (CIT).

OK, it doesn’t sound that sexy, but trust us the analysts are salivating over its potential.

This week we heard that Carclo has been signed up by one of the leading smartphone manufacturers to work on the launch of a new concept phone due out at the end of the year.

Ossett-based Carclo’s innovative CIT’s fine line technology will be used on the phone’s touch sensors, replacing the expensive Indium Tin Oxide sensors that are currently used on all smartphones.

Carclo’s touch sensors come at around half the cost of the equivalent Indium Tin Oxide ones as indium is very rare and tin is expensive.

Carclo believes that CIT’s profit potential in touch screen applications alone exceeds the rest of the group’s profitability. In the touch sensor market, CIT can be used for a whole range of applications including smartphones, tablets, PCs and laptops. The point is that the touch sensor market is just one of a number of emerging sectors for CIT’s technology.

But while all the focus is on CIT at the moment, it would be a mistake to ignore the potential of Carclo’s other businesses.

An increasing number of growth opportunities exist in the group’s traditional operations, which include technical plastics and precision products.

The technical plastics division, which supplies plastic components for the medical, optical and electronics markets, saw underlying operating profits rise 14.3 per cent to £5m in the year to March 31, helped by increased sales of medical diagnostic and LED optical products

While the precision products division reported a 15.4 per cent fall in underlying operating profits to £2.2m, Carclo said a ramp up in production on a number of supercar lighting programmes helped the lighting business following a number of delays in the first half. As a consequence the second half was much stronger.

A number of top of the range supercars such as Aston Martin, Bugatti Veyron and Lamborghini all source their LED lighting from Carclo, making it a dynamic and attractive market to be in.

Williamson says Carclo has no plans to split off these other businesses, but in the long term a management buyout looks attractive if they are to avoid falling in the shadow of CIT and not receiving the investment attention they deserve.

n It says much about the challenges the UK economy faces that Vp Plc’s second consecutive year of falling profits was hailed as “very satisfactory” by the equipment hire group.

The Harrogate-based company, which serves sectors spanning water treatment, housebuilding, rail and DIY, said profits before tax and exceptional items fell 14 per cent to £13.8m.

Sales lifted five per cent to £141m in the year to the end of March, but operating margins fell from 13.9 per cent to 11.7 per cent.

But against a stagnant UK economy, it was a result of which Vp should be “very proud”, said chairman Jeremy Pilkington. Set in context with its peers, it is indeed a result worth celebrating.

Last year, building supplies giant Wolseley sold its Brandon tool hire business to private equity firm Rutland Partners for £43m, after a raft of branch closures. It paid £71.9m for the company four years earlier.

Last month tool-rental firm Speedy Hire said it expects the next 18 months for the business to be “bumpy”, and posted a deeper pre-tax loss at £27m, owing to exceptional costs related to redundancies and site closures.

Vp’s recession has not been without its challenges – it was forced to shed about 100 jobs at the height of the recession.

But the company remains profitable, and crucially, an improved balance sheet gives it scope to “contemplate investment where others are not”. Vp strengthened its financial position, cutting net debt by £7.8m to £40.5m.

The 50-year-old company, which earns about 85 per cent of its revenues from the UK, is under no illusions about how tough the next 18 months will be.

“We’re not banking on any material recovery in the UK economy,” said managing director Neil Stothard.

Instead, its self-help measures involve pursuing growth abroad, while gaining market share at home. Vp opened a new depot in Hanover, Germany, at the start of the year. In time, Mr Stothard said it hopes to earn 20 per cent of its sales internationally.

A disciplined approach to investment, driving down debt, and chasing growth abroad– it’s a strategy that deserves recognition.